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COVID-19 accelerates digital transformation of global business players
The unprecedented coronavirus pandemic, which broke out in late December 2019 and has now engulfed the world, portends to reshape our lives, and the world order as we know it. This is the 14th and last of a series to cast light on the changes that might lie ahead. ― ED.
By Anna J. Park
In his book "Homo Deus: A Brief History of Tomorrow," historian Yuval Noah Harari warns readers of the possibility of a deepening polarization of society due to full-scale digitization.
Among the various reasons he cited, one was intensified class division resulting from the concentration of economic, technological and political power in the hands of a very small number of the elite. The Israeli academic also said firms utilizing artificial intelligence (AI) algorithms and big data will have supreme authority over human minds.
This is certainly a grim outlook, but provides a powerful and penetrating insight. Navigating through a global pandemic has rapidly altered people's lifestyles. It seems obvious that the world is moving faster towards an era of accelerated digitization, where big data and AI technologies could serve as a central axis in a post-crisis society.
IBM CEO Arvind Krishna believes that COVID-19 will drastically accelerate the global digital transformation of companies. Speaking at IBM's Think Digital 2020 Conference in early May, he claimed that the pandemic has taught companies to adopt digital innovation such as hybrid computing and AI.
"History will look back on this as the moment when the digital transformation of business and society suddenly accelerated," Krishna said. "More than 20 years ago, experts predicted every company would become an internet company. I am predicting today that every company will become an AI company, not because they can, but because they must."
The move toward the digital transformation is apparent in Korea. Over the last few months, tech companies such as Naver, Kakao and NCSOFT have become among the country's top 15 companies by market capitalization, while the rankings of traditional economic powerhouses Hyundai Motor and POSCO have fallen.
Due to COVID-19, many people have been engaged in social distancing, avoiding direct human contact, while more companies are allowing telecommuting. As a result, businesses in almost all sectors from finance and distribution to entertainment are seeking digital innovation. Big data accumulated by credit card companies is being used to help contain the disease by tracking the movements of confirmed patients.
Market observers agree that corporate investment in big data and AI technology will accelerate at this significant juncture.
"It is widely expected that the corporate focus on developing big data and AI technologies will intensify over the next few years. Investment by financial firms on big data processing has increased. Some financial firms have launched big data centers to delve into analyzing information to create profits," Yoon Chang-yong, the research center head at Shinhan Investment, told The Korea Times.
"Yet I think the economy's hardware production side is still as important, as developments in software like AI and big data will require the updating of hardware in the coming years. IT systems such as 5G network equipment will be the first."
The research head added changes in the value chain system towards onshoring or reshoring also have to be assessed in measuring the impact of advanced software.
Other equity analysts suggest portfolio investments in big data and AI-based companies because of their expected dominance over the next 30 years.
"One has to deeply ponder the fact that every bit of our data is currently being saved (by these companies), whether it is where we've been or keywords in online searches," said Han Dong-youb, Hana Financial Investment's global equity director and manager of the Club1 WM Center, the firm's wealth management unit.
"One of the best ways for average people to live through the next era would be to have equity holdings in major global firms that are leaders in innovation and development of big data and AI technologies," he noted. He believes that the world's income disparity will increase due to exclusive data access.
"Only the top 0.1 percent of the world's population is expected to own most of the world's wealth in the near future. Once the whole picture is settled on who will possess ultimate dominance over big data and AI technologies, there won't be any easy way to turn back the clock and it will be very difficult to change the economic order," Han said, underscoring the need to stay aware of changes in the post-pandemic global economic landscape.
